Fact vs. Myth: EDI

February 16, 2016 Daniel Ford

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There are a lot of misconceptions floating around when it comes to EDI and supply chain processes. Some of these misconceptions are harmless enough, but others…well, it’s time to set the record straight on a few widely held myths. Chances are, you’re familiar with many—if not all—of the following untruths, and you’ve probably even heard decision makers in your organization cite them. The first one we’ll start with is a personal favorite, and needs to be exposed for the falsehood that it is:

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"Compliance programs are developed to serve buying organizations and penalize suppliers" 

 

This particular myth has experienced true staying power. Of course, compliance penalties, i.e. chargebacks, have had a huge hand in keeping this one alive and healthy, and for good reason: they can add up to be a substantial expense for non-compliant suppliers. Granted, compliance penalties are an important part of any effective compliance program, but they only make up one part of the system.

When a compliance program is effectively implemented, both the buyer and the supplier win. Orders that are fulfilled without error get to store shelves on time, and both parties reap greater profits. Good compliance programs are, in fact, designed to be mutually beneficial for both parties involved.

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"It’s completely acceptable to rely on paper for some or all of our business processes"

 

When data resides on paper, and not digitized within your business systems, your organization will never experience complete process automation. Even if the organization is nearly 100% EDI enabled and has successfully automated many critical business processes, there are still substantial improvements to be seen in your day-to-day operations by digitizing data.

For example, leveraging EDI software that digitizes supply chain data can validate document accuracy by using a three-way matching process between POs, ASNs, and invoices. This can help save time and reduce costly exceptions.

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"My off-the-shelf ERP system can satisfactorily function as a B2B integration platform"

 

Your ERP system is capable of many things, but it was not designed to take the place of a full-fledged EDI solution that includes communications, mapping and translation software.

Without integrating EDI data from your individual trading partners into your ERP, it can be difficult to provide insights and intelligence into specific supply chain related documents. However, when you integrate EDI with your ERP, the two systems combine to enable you to process orders faster, accelerate the order-to-cash cycle, and provide the capacity to drive higher revenue.

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"An internal EDI department does not need to be accountable to service levels"

 

Your internal EDI department plays an integral role in supporting your organization’s infrastructure. Establishing and enforcing KPIs within your EDI department—for example, turning around a change on an EDI map within a predefined time frame—enables your organization to keep up with increased customer or regulatory demands, and helps you avoid steep fines or missed sales opportunities. The negative consequences of an overwhelmed internal EDI department can be felt throughout the whole organization, eventually resulting in lost customers and lost revenue.

 

 How to avoid chargebacks

 

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